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Cardamom prices rise on output drop worries

Cardamom prices rise on output drop worries
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First Published: Fri, Jul 20 2007. 12 30 AM IST
Updated: Fri, Jul 20 2007. 12 30 AM IST
Kochi: The cardamom auction season in Kerala began this month and, if the first auctions are any indication, prices of the fragrant spice have increased by around a third over last year on concerns of a poor harvest.
A four-month-long dry spell, followed by heavy downpours over the last two months, has delayed the harvest.
In the last two weekly auctions, at the Kerala Cardamom Processing and Marketing Co. (KCPMC) at Kumily and Mas Enterprises at Vandanmedu, both in the Idukki district of Kerala, prices have been in the Rs425-440 a kg range compared with Rs300-325 a kg in 2006.
P.C. Punnose, secretary of KCPMC, says the company has decided to start auctions even though the harvest is expected to be delayed by at least a month. The long summer spell without any pre-monsoon showers and the torrential rain that followed in the last two months have destroyed the crop in Idukki which accounts for nearly 70% of India’s cardamom production. Punnose says the production this year will see a drop of at least 20% compared with last year.
In 2006-07, cardamom production was around 11,235 tonnes, well below the 12,540 tonnes produced the previous year. With a further fall this year, indications are that prices may touch Rs600 a kg.
Anjo Jose, director of Mas Enterprises says that the crop this season should see a 20% drop and prices are expected to zoom. The delayed harvest has also led to a decline in arrivals of cardamom at the two auction centers: only 10 tonnes at KCPMC and 6 tonnes at Mas against an average arrival of around 30 tonnes per lot.
The government’s trade promotion body Spices Board has just begun field visits to estimate the crop production. The board admits that response from the farmers indicate a fall in production for the second successive year. According to Dharmesh Bhatia, a technical analyst with Kotak Commodity Services, the August contract for cardamom futures on Multi Commodity Exchange has shown a sharp upward move to touch Rs549, an indication of how high prices could go.
Meanwhile, the board is all set to launch its electronic auction for cardamom at the Cardamom Planters Association (CPA) at Bodinaykannur in Tamil Nadu from 23 August. The new auction system is to be introduced on a trial basis and will be extended to other auction centers depending on the success of the experiment.
The screen-based auction system will ensure anonymity of the bidder who will no longer have to go for the traditional outcry system. The price for each sample will be displayed on the computer screen and a bidder has to quote its price online and in real time. This will ensure buyers cannot form a cartel and manipulate prices.
Under the earlier system, bidders could manipulate prices by either forming a cartel or giving indications to others that they need not bid for any particular lot and keep the prices at the levels they desire, said Spices Board director S. Kannan. According to planters association president N. Rajagopal, CPA will launch its traditional auctions to coincide with the start of the electronic auction. He fears that as in Idukki, production in the cardamom-growing areas of Tamil Nadu will see a sharp decline, by as much as 30%.
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First Published: Fri, Jul 20 2007. 12 30 AM IST